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Findings in a U.S. Department of Justice (DOJ) report show the Federal Bureau of Prisons (BOP) spent more money than needed for health care services in prisons nationwide due to at least one contractor’s shady activities.
DOJ funneled about $1.2 billion from 2010 to 2019 to nine medical services contractors, who then entered into subcontractor agreements with providers, an inspector general report says. The providers are responsible for medical care to prison inmates. Prime contractors submit invoices to BOP for reimbursement using codes published by the American Medical Association (AMA) relating to medical procedures and services for private and public insurance programs.
The Federal Bureau of Prisons relies on such external medical services for inmate treatment and the report notes “[t]here are no statutes or regulations that set BOP reimbursement rates.” According to The Federal Acquisition Regulation, a prime contractor is responsible for managing its subcontracts.
As of 2016, DOJ’s inspector general began the process of examining healthcare claims from the contractors. The body learned a contractor selected more expensive materials “on behalf of its subcontracted medical service providers” and in other instances had the provider submit its own codes. DOJ notes in its report that “[h]aving the Comprehensive Medical Services Contractor select the CPT/HCPCS code is contrary to the approach typically used in traditional medical practices, wherein the CPT/ HCPCS code submitted for reimbursement is selected by the provider rendering the medical services, or individuals from their staff.”
In addition, a DOJ review of documents revealed that providers were paid hourly as opposed to services provided — which is the idea behind codes. In nearly every scenario, the prime contractor selected codes that were the “costliest,” while subcontractors who were given the autonomy to select materials did not always select the highest tier.
DOJ outlines in its report that costs would have likely been much lower if prime contractors had not bypassed “traditional medical practice” and required providers to choose codes. Indeed, the national payment for level five of the Medicare physician fee schedule in 2021 was $183.19 — which is significantly more expensive than in lower codes. Claims are put forth through codes. 87% of claims submitted that went through the subcontractors were Level 4 or under, whereas 97% of claims selected by the prime contractor were Level 5.
“We concluded the BOP potentially paid higher amounts for similar services when a Comprehensive Medical Services Contractors selected CPT/HCPCS codes on behalf of its subcontracted medical service providers, as compared to when this Comprehensive Medical Services Contractor used codes submitted by its subcontracted providers,” the report states.
The report recommends BOP personnel implement a plan to ensure contractors do not select codes themselves and consult providers.